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2020 (2) TMI 1319 - AT - Insolvency and BankruptcyMaintainability of application - Jurisdiction to entertain application - Approval of Resolution Plan - Section 31 of the Insolvency and Bankruptcy Code, 2016 - refund of forfeiture of the Bid Bond Guarantee - HELD THAT - It is evident that the application under Section 60(5) of the I B Code can be entertained by the Adjudicating Authority (National Company Law Tribunal) both on the question of facts and law or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor - In the present case, they cannot raise the question of fact mixed with question of law relating to resolution process. During the Corporate Insolvency Resolution Process period, the question of law involved is that in the facts and circumstances, the approval of the resolution plan will be futile or not. If the allegation as raised by Deccan relating to net realistic capacity of the Corporate Debtor has been wrongly shown in the InformationMemorandum . On the realistic and actual basis of technical production of the capacity of the Corporate Debtor , the Deccan brought to the notice of the Adjudicating Authority that the present plan was unviable or unfeasible or unimplementable - the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench rightly observed that the Insolvency and Bankruptcy Code do not confer any power and jurisdiction on the Adjudicating Authority to compel specific performance of a plan by an unwilling resolution applicant. In absence of fact that there was any procedural infirmity and having not proceeded in the manner as was required, we hold that the plan approved was violative of Section 30(2)(e) of the I B Code , having contravened the provisions of the I B Code - the plan approved by the Committee of Creditors under sub-section (4) of Section 30 of the I B Code and rejected by the Adjudicating Authority in terms of Section 31(2), no interference is called for. Refund of forfeiture of the Bid Bond Guarantee - HELD THAT - This Appellate Tribunal is not inclined to grant any relief to the Deccan . On 18th November, 2019, the Committee of Creditors was allowed to go through the other resolution plans and approve the same. As observed by the Adjudicating Authority subsequently on 6th December, 2019, the Deccan was also allowed to settle the claim. After having received all the information including 2016 MM Report relating to net realistic volume production from the existing facility of the Corporate Debtor , having submitted the plan, which is not viable and feasible - Non-availability of 12,500 ton press which is a critical component of the resolution plan could not be installed on Metalyst s land and needed to be installed at the land of the sister concern, which is an undergoing corporate insolvency resolution process . Appeal dismissed.
Issues Involved:
1. Approval of the Resolution Plan. 2. Withdrawal of the Resolution Plan by Deccan Value Investors LLP. 3. Jurisdiction of the Adjudicating Authority under the Insolvency and Bankruptcy Code (I&B Code). 4. Feasibility and viability of the Resolution Plan. 5. Refund of the Bid Bond Guarantee. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan: The Resolution Plan submitted by Deccan Value Investors LLP was approved by the Committee of Creditors (CoC) on 28th August 2018. The Resolution Professional subsequently placed the plan before the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) for approval under Section 31 of the I&B Code. 2. Withdrawal of the Resolution Plan by Deccan Value Investors LLP: Deccan conveyed its decision to withdraw the Resolution Plan and filed for approval by the Adjudicating Authority. The Adjudicating Authority refused to approve the Resolution Plan and directed the Resolution Professional/CoC to invite fresh bids within 21 days. Deccan also challenged the order regarding the non-refund of the Bid Bond Guarantee. 3. Jurisdiction of the Adjudicating Authority under the I&B Code: The CoC argued that the Adjudicating Authority's powers with respect to an application filed under Section 31 of the I&B Code are circumscribed by Section 30(2) and that it has no jurisdiction to entertain an application for the withdrawal of a resolution plan subsequent to its approval by the CoC. The Adjudicating Authority, being a creature of statute, is bound within the four corners of the said statute and cannot exercise its jurisdiction beyond the scope prescribed under the I&B Code. 4. Feasibility and Viability of the Resolution Plan: Deccan argued that the production capacity of Metalyst Forgings Ltd. (Corporate Debtor) was inaccurately represented, affecting the feasibility of the Resolution Plan. The Resolution Professional provided information based on the 2016 MM Report which showed a production capacity of 210,747 MTPA, whereas the actual capacity was approximately 45,000 MTPA. Deccan claimed that this misrepresentation and other inaccuracies in the financials and operational data vitiated the Resolution Plan. 5. Refund of the Bid Bond Guarantee: The Adjudicating Authority observed that the Resolution Applicant (Deccan) would not be entitled to a refund of the Bid Bond Guarantee if the fresh bid was not accepted or if Deccan did not participate in the fresh bidding process. The Appellate Tribunal upheld this decision, noting that Deccan had received all relevant information, including the 2016 MM Report, and had submitted a plan that was not viable and feasible. Conclusion: The Appellate Tribunal dismissed both appeals, upholding the Adjudicating Authority's order dated 27th September 2019. It concluded that the plan approved by the CoC and rejected by the Adjudicating Authority did not warrant interference. The Tribunal also denied any relief to Deccan regarding the refund of the Bid Bond Guarantee, emphasizing the importance of accurate and reliable information in the insolvency resolution process.
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